Employers can learn a lot about a job applicant outside of an interview, but they should exercise that power with caution to avoid falling afoul of the law.

There is no sure way to predict a problem employee, but taking the time for background checks during the application process is one step employers can take to create a safer work environment, experts say. “Background checks cannot predict the future,” says Marsha Hernandez, managing director of employment screening at Pinkerton Consulting and Investigations, a detective agency. “But they can give you enough information to make the best possible choice based on the information available.”

Despite their efficacy, a small portion of employers have been using pre-employment screenings. Only a quarter of job applicants said an employer checked their financial background and 5% were rejected from a job due to their financial profile, according to a survey of 1,100 U.S. workers by the National Financial Educators Council, a financial education company.

Under federal guidelines, employers can check an applicant’s work history, education, criminal record and credit history, either themselves or through a third party agency. However, if an employment decision is based off this data, employers are obligated to inform the applicant and give them an opportunity to dispute the information. It is also illegal to check an applicant’s medical records during the hiring process or base employment decisions off race, national origin, sex, religion or genetic information.

Employers can also drug test job applicants, however industries like construction and transportation have begun to see a reduction in their labor pool due to increasing rates of failed tests.

Though going through the process of performing a background check can be costly and time-consuming, it can pay off in the long run in terms of protecting business assets, employees and consumers of your product or service, says Tina Syring, a labor and employment law attorney at Barnes and Thornburg in Minneapolis. “When you go through the interview process, you’re only meeting the individual and only getting to know them through a series of questions and don’t know much else about that person,” she says. “To do a background check, it gives you some information in terms of red flags.”

If concerning information does come up, dialogue with the job candidate is essential. “As you go through the process, you have to engage,” Syring says. “You have to ask follow-up questions and give applicants an opportunity to respond.” Such red flags could include a registered sex offender applying for a job at a school, or an applicant with a poor credit rating who is up for a job with significant financial responsibility, she adds.

In addition to federal laws, state regulations limit the type and amount of information employers can collect during the hiring process. In terms of criminal backgrounds, some states only allow screenings to go back seven years, while in others, only convictions can be reported, Hernandez says. In some states, like Minnesota, employers cannot check an applicant’s credit profile until there has been an initial interview, Syring adds.

Social media is one tempting source of information on job applicants. Nearly 75% of recruiters use social networks during the hiring process, according to a 2014 survey of 1,850 human resource professionals by Jobvite, a recruiting services company. However, using it as part of an official background check is a “gray area” when it comes to regulation compliance, Hernandez says.

Since sites like Facebook
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and Instagram are geared toward interactions between friends and family, users are more likely to post information like race, religion, sex and national origin, compared with on LinkedIn
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which is intended for professional interactions, Syring says.

If an applicant’s social media is the cause of their rejection, it is possible for them to file a job discrimination complaint because of the personal information that could be gathered from their profile, Syring says. “You’re opening yourself up to a potential discrimination lawsuit,” she says. “It’s a double-edged sword.”

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